Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 22

How would you explain the relationship between value-chain analysis and the use of the balanced scorecard for a firm that uses both? You can use a hospital as an example.

Step 1 of 2

Value chain analysis is a detailed strategic analysis tool. It helps to recognize the firm’s competitive benefits. It helps to do a detailed analysis of the places where customers can increase or scope of cost reduction. It gives a better understanding of the linkage with suppliers, customers, and similar firms in the industry. There are three main phases of the value chain are upstream, operations, and downstream.

The balanced scorecard seeks to endow with a “balanced view” of the company’s routine. It appraises all the departments in both financial and non-financial areas. The performance measures have few drawbacks. They primarily focus on financial measures. This disadvantage gives rise to the preparation of a balanced scorecard.